Electromagnetic Geoservices ASA (EMGS) is extending its cost reduction plans by removing another vessel from its fleet, and reducing staffing levels in a move that will reduce operation costs by up to US$35 million annually, and $70 million for 2015.
 |
|
EMGS vessels. From EMGS. |
EMGS is taking one of its vessels from its operating fleet, leaving it with two in the waters. The vessel that will be taken out was not named. As of 2Q, three vessels were operating on multi-client projects in Norway, Gulf of Mexico, and Indonesia.
“The company has identified and implemented comprehensive cost reductions on terms and conditions for sub-contractors and in staff levels,” EMGS said. “The key elements of the program are a reduction of the vessel capacity by one vessel, from three to two vessels, and a corresponding reduction in the global employee expenses.”
EMGS has initiated several cost reduction measures in 2015 in both 1Q, and in the summer, and based on the development in revenue for the year, in addition to the outlook for the rest of 2015 and 2016, EMGS has decided to implement further cost reductions.
The cuts are expected to reduce annual operation costs by approximately US$35 million.
“Hence, the results from the total reductions implemented in 2015 are expected to amount to $70 million, reducing the annual operational cost level to below $100 million,” EMGS said. “The company will have restructuring charges of approximately $2.8 million, whereas $1.5 million will be booked in 3Q and $1.3 million will be booked in 4Q 2015. In addition, a provision related to loss on charter agreements of $4.4 million will be booked in 3Q 2015. The initiatives will be implemented immediately and yield effects gradually.”
In August, EMGS’s cost reduction program saw cuts in its fleet, workforce, and capital expenditures. Then, the company went from four to three vessels, removing the EMGS Leader in mid-May.
Its 2Q 2015 results saw the company take a big hit of a nearly 72% decline from US$42.5 million in 2Q 2014 to $12.1 million in the period.
Read more:
Subscribe
